Are you sure that's correct? There is a 30 day grace period, so if you DON"T trade GOOG in January of 2006 you can deduct all losses for 2005. If you trade GOOG before Jan 31 (let's say Jan20), the losses for 2005 will roll into to 2006 (ie you cannot take them in 2005) and used only to adjust the base cost of GOOG for the Jan20 trade. So it's a simple issue to avoid. Just don't trade stocks you had total losses in in 2005 for the first 30 days of 2006.
You are correct. There are many other odds & ends points, but this major one I didn't tack on to the end of example #1. I've added an edit for clarification, to the previous post.
Interesting thoughts. I believe a "wash sale" is like this: You own a stock at a cost of $30/share. It is now trading at $20/share. But it is a good long term hold. You sell the stock on Dec. 28 and take the loss for the year. If you then buy it back after the first of the next year to establish your long term position again this violates the "wash sale" rule. You cannot buy back that same stock for a period of 30 days. The IRS position would be that you are taking a "phony" loss. I believe, if memory serves from my Series 7 test, this is the correct definition of a "wash sale". SteveD
I think the 3 posts prior to this are correct. BUT, I used to still have to break it down one by one with wash sales and stuff in my sched D. BUT, I know what stocks I am net loss for the year and I try not to trade it 30 days going into next year so I can take the loss for that year. I know it's a moot point since we all make money
Is there a very good website for new traders to look up information about taxes for traders? I don't want a government website that has extremely complicated stuff and flat out boring (at least if possible), just a down to earth website that highlights how it all works and maybe goes into detail. I am 18 so if you can try and understand I'm absolutely clueless about taxes and want to be prepared. Thanks in advance.
I think you're wrong about government information. Check this Web page: http://www.irs.gov/taxtopics/tc429.html I think it is easy to read and understand. Even the tax code is readable. It's just that there is a lot to it, and it isn't written to be easily understood. But relying on somebody else for your basic understanding of taxes is relying on somebody else for managing your money.
Thanks for the link I saw someone say they had gainskeeper, I have ameritrade APEX as well. But does it get complicated if you have multiple brokers. I also had an account at ETrade but they screwed me out of around 700 dollars with an incident and my information is all gone *those bastards* So am I in trouble, I only made around 30 trades, and I took losses on all of them anyways, I only had a gain of around 50 bucks the whole time. I'm just trying to figure it out. I also have an account with a Forex broker and am opening an account with a Futures broker, so it's just confusing for me to understand how it all works. But I'll read up on the link you gave me and try and understand. Thanks again.